Europe must protect its steel sector – Moravia Steel

Europe must protect its struggling steel sector or risk undermining its efforts to strengthen its defense capabilities, according to Petr Popelár, chairman of Moravia Steel, as reported by Bloomberg.

He called for the introduction of import tariffs and quotas, as well as increased state funding to help the industry achieve its environmental goals.

Popelar noted that EU metallurgical companies face excessive regulation, high energy prices, and unfair foreign competition.

“Europe should be interested in keeping as much steel production capacity as possible so that strategic sectors such as defense and infrastructure don’t depend on imports from countries that aren’t our geopolitical allies,” he explained.

Energy prices have been a serious problem for metallurgical companies recently, writes Seznam Zprávy. Before the Covid pandemic, the Třinecké železárny metallurgical plant, whose main shareholder is Moravia Steel, spent about CZK 3.5 billion on energy, in 2023 this amount rose to CZK 8.65 billion, and last year it was CZK 6.69 billion.

Another problem is the general decline in demand and the simultaneous supply of cheap steel from China.

«Low demand is hurting traditional European producers of high-quality and environmentally friendly steel, while the market is flooded with cheap products from Asia, North Africa, and the Middle East. The negative balance is due to extremely high energy prices and the environmental, administrative, and legislative requirements of European bureaucracy,» said Moravia Steel group owner Tomáš Hřeneček.

Třinecké železárny estimates the cost of decarbonization at approximately €1 billion (25 billion crowns), with about two-thirds of the amount going toward the construction of an electric arc furnace. However, the key investment in the EAF and infrastructure has been postponed until at least 2030 due to a lack of government support and regulatory uncertainty.

Třinecké železárny has received 50% of the necessary investment from the EU Modernization Fund. However, in order to start construction, subsidies must cover 70%, Petr Popelář noted. According to him, if this fails, the company will probably be forced to suspend the project. He added that in such a situation, the company may have to switch to producing steel from semi-finished products imported from abroad or pay extra for emission permits.

As GMK Center reported earlier, that in 2024, the Třinecké železárny steelworks increased its steel production to 2.425 million tons, which is 10,000 tons more than a year earlier. Financial results remain challenging. Revenue from sales of products and services decreased by 4.7% y/y to CZK 47.37 billion. However, thanks to strict cost control, the company was able to record a net profit of CZK 316 million, compared to CZK 44 million in 2023.